How to prepare accounts for smooth tax returns filing
Knowing how to prepare accounts properly for your accountant, or for you to file your own tax return, is an important area to get to grips with. Keeping adequate records is vital in order to be able to provide the necessary information to HMRC, or your accountant, from which they can calculate how much tax you owe. It is also a legal requirement to keep detailed accounting records for your business.
Whilst this is a mandatory requirement of all businesses and self-employed individuals, how to prepare accounts is still a query we receive from clients. So, we’ve outlined some useful information below to help.
Form good habits, and stick to them – the admin associated with book keeping is hardly exciting and some of us can struggle with motivation in this area. However, regularity is key, so forming a strong routine will help. Dependent on your business type, you may choose to go through your expenses and income on a weekly or monthly basis, and record them. Keep these records with all receipts and invoices, as well as corresponding bank statements. These can then be filed when the times comes, and there won’t be a last-minute dash to get everything in order and sift through a mountain of un-organised paperwork.
Decide on manual or digital accounting systems – owners of small businesses may choose to execute manual book keeping. However, businesses with a lot of transactional activity or those that prefer a streamlined way to keep accounting records in a safe, secure and accurate way, can choose to use accountancy software. Systems such as Xero, which we offer, provides the latest features including scanning of receipts on smart devices to accompany digital expenses records, regeneration of recurring invoices and GPS tracking for accurate mileage monitoring and recording. All information put into the software forms the accounts at the end of the year, which your accountant can simply log into and use for the tax return. Working in this way means the accounts are always up-to-date and ready for filing as soon as the year end comes – so you know what your tax liability is well in advance, and have time to plan financially.
This sounds like a simple enough task, but we never fail to be surprised at how many businesses are either unsure on how to prepare accounts, or leave this activity until the tax return filing deadline is near. Getting your accounts to your accountant well in time is essential to ensure they have sufficient time to prepare them for filing, so filing deadlines can be met. Failure to meet deadlines can lead to penalties.
Need help with preparing your year-end accounts or tax returns filing? Get in touch on 01827 54944.